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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to _________ 001-13106 (Essex Property Trust, Inc.) 333-44467-01 (Essex Portfolio, L.P.) (Commission File Number) ESSEX PROPERTY TRUST, INC. ESSEX PORTFOLIO, ...

Financial Data and Key Metrics Changes - The company reported a solid quarter with core FFO per share exceeding the midpoint of guidance by $0.03, leading to an increase in the full-year guidance midpoint for core FFO per share to $15.94 [9] - Year-to-date blended lease rate growth was 3% across all leases and 2.7% on like-term leases, demonstrating the competitive advantage in low-supply markets [3][4] Business Line Data and Key Metrics Changes - Southern California's blended lease rate growth was around 1.2%, while Northern California achieved close to 4%, and Seattle was at about 2% [14] - The structured finance portfolio saw $118 million in redemptions year-to-date, with an expectation of $200 million in total proceeds for the full year [9] Market Data and Key Metrics Changes - Northern California remains the best-performing region, with significant rent growth driven by AI-related startups and favorable rent-to-income ratios [4] - Seattle's market is stable but trending at the low end of expectations due to soft demand and supply constraints [4][36] Company Strategy and Development Direction - The company is optimistic about the market outlook for 2026, anticipating a decline in total housing supply deliveries by almost 40% [6] - The focus remains on acquiring assets in high-growth submarkets, with nearly $1 billion invested in Northern California since 2024 [6][30] Management's Comments on Operating Environment and Future Outlook - Management noted that hiring and investment decisions have been delayed due to a soft economic environment and policy uncertainty, but the West Coast is expected to outperform the U.S. average [5] - The company anticipates stable growth in 2026, with earnings projected to be between 80 to 100 basis points [6][19] Other Important Information - The transaction market on the West Coast is slightly above 2024 levels but remains below historical averages, with cap rates generally in the mid-4% range [7] - The company has executed several financings throughout 2025 to strengthen its balance sheet and increase liquidity [11] Q&A Session Summary Question: Can you break out the blended rate growth for the third quarter? - Management confirmed that Los Angeles was a drag on performance, with Southern California at 1.2%, Northern California close to 4%, and Seattle at about 2% [14] Question: Is there a pickup in demand in Northern California? - Management noted steady strength in Northern California, with a slight uptick in tech job postings benefiting the region [16] Question: Can you break down the 2026 earnings estimate? - Management indicated that Northern California is expected to lead, with Southern California ranking third and Seattle in the middle [19] Question: How do you view the impact of AI on job growth? - Management believes AI will be net additive to the economy, with Seattle's job market remaining stable due to strong anchor industries [65] Question: What is the outlook for concessions across the portfolio? - Concessions are comparable to the same period last year, with negligible impact on renewals and primarily affecting new leases [59] Question: What is the strategy regarding the preferred equity book? - Management stated they are not exiting the business but are being more selective due to heavy redemptions and compressed yields [49] Question: How does the company view the impact of potential changes in Seattle's local government? - Management does not foresee significant changes affecting apartment communities, as recent legislation has balanced tenant protection with housing production needs [51]

Financial Performance - Net Income per diluted share for Q3 2025 was $2.56, compared to $1.84 in Q3 2024, primarily driven by gains on sale of real estate[9] - Core FFO per diluted share grew by 1.5% compared to Q3 2024, exceeding guidance midpoint by $0.03[9] - Same-property revenue and NOI grew by 2.7% and 2.4%, respectively, compared to Q3 2024[9] - The company revised its full-year Net Income guidance to a midpoint of $10.58 per diluted share, an increase of $0.41[6] - The company revised its full-year Total FFO guidance to a midpoint of $15.96 per diluted share, an increase of $0.07[6] - The company revised its full-year Core FFO guidance to a midpoint of $15.94 per diluted share, an increase of $0.03[6] Capital Structure and Liquidity - Total market capitalization is $24.5 billion as of September 30, 2025[10] - The company's capital structure consists of 73% equity, 23% unsecured debt, 3% secured debt, and 1% commercial paper and credit facility[11] - Total liquidity stands at $1.507 billion, including $1.380 billion in available unsecured commitments and $127 million in cash, cash equivalents, and marketable securities[12] Debt and Credit - The company increased its unsecured credit facility from $1.2 billion to $1.5 billion and extended the maturity date to January 2030[9] - The company amended its existing $300 million unsecured term loan to extend the maturity date to January 2031 and reduced the interest rate by 0.10% to SOFR plus 0.85%[9] - Debt to Total Assets is 34%[2]

Core Insights - Essex Property Trust Inc. (ESS) reported third-quarter 2025 core funds from operations (FFO) per share of $3.97, exceeding the Zacks Consensus Estimate of $3.96 and reflecting a 1.5% year-over-year improvement [1][8] - The company raised its full-year 2025 guidance for core FFO per share, projecting a range of $15.89-$15.99, up from the previous range of $15.80-$16.02 [9] Financial Performance - Total revenues for the third quarter were $473.3 million, a 5% increase year-over-year, but slightly below the Zacks Consensus Estimate of $475.5 million [2] - Same-property revenues increased by 2.7% year-over-year, while same-property operating expenses rose by 3.5% [3] - Same-property net operating income (NOI) grew by 2.4% year-over-year, which was below the estimated growth of 2.6% [3] Interest and Operating Expenses - Interest expenses increased by 8.4% year-over-year to $63.3 million, close to the estimate of $63.7 million [4] - Financial occupancy rates were reported at 96.1%, down 10 basis points year-over-year and below the estimated 96.4% [3] Portfolio Activity - During the third quarter, ESS acquired a 234-unit apartment community in San Jose, CA, for $100 million and disposed of three apartment communities for a total contract price of $244.7 million [5] Balance Sheet Position - As of September 30, 2025, ESS had $1.5 billion in liquidity, including cash, cash equivalents, and marketable securities [6] - Cash and cash equivalents, including restricted cash, increased to $75.2 million from $67.9 million at the end of the previous quarter [6] Future Guidance - For the fourth quarter of 2025, ESS projects core FFO per share in the range of $3.93-$4.03, with the Zacks Consensus Estimate at $4.01 [7] - The full-year guidance is based on projections for same-property revenue growth of 3.00-3.30%, operating expense increase of 3.00-3.50%, and NOI expansion of 2.80-3.40% [9]

Core Insights - Essex Property Trust (ESS) reported quarterly funds from operations (FFO) of $3.97 per share, exceeding the Zacks Consensus Estimate of $3.96 per share, and up from $3.91 per share a year ago, indicating a surprise of +0.25% [1] - The company posted revenues of $473.3 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.47%, but up from $450.7 million year-over-year [2] - The stock has underperformed, losing about 10.3% since the beginning of the year, while the S&P 500 has gained 17.2% [3] Financial Performance - Over the last four quarters, Essex Property Trust has surpassed consensus FFO estimates four times and topped consensus revenue estimates three times [2] - The current consensus FFO estimate for the upcoming quarter is $4.01, with expected revenues of $477.94 million, and for the current fiscal year, the estimate is $15.96 on $1.89 billion in revenues [7] Market Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future FFO expectations [3][4] - The Zacks Industry Rank places the REIT and Equity Trust - Residential sector in the bottom 41% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - The current Zacks Rank for Essex Property Trust is 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Financial Performance - Reported Net Income per diluted share for Q3 2025 was $2.56, a 39.1% increase from $1.84 in Q3 2024, primarily driven by gains on sale of real estate[9] - Core FFO per diluted share grew by 1.5% year-over-year, reported at $3.97, exceeding the midpoint of the guidance range by $0.03[9] - For the three months ended September 30, 2025, net income available to common stockholders was $164,621,000, compared to $118,424,000 for the same period in 2024, representing an increase of 39%[42] - FFO attributable to common stockholders and unitholders for the three months ended September 30, 2025, was $268,673,000, up from $253,533,000 in 2024, reflecting a growth of 6%[42] - The Company reported earnings from operations of $210,399,000 for the three months ended September 30, 2025, compared to $128,790,000 in 2024, which is an increase of 63%[46] - Net income available to common stockholders for the nine months ended September 30, 2025, was $589,093,000, up from $484,069,000 in the same period of 2024, representing a 21.7% increase[57] - Funds from operations (FFO) attributable to common stockholders and unitholders for Q3 2025 were $268,673,000, compared to $253,533,000 in Q3 2024, reflecting a 6.0% increase[57] - Core FFO per share – diluted for the three months ended September 30, 2025, was $3.97, compared to $3.91 for the same period in 2024, indicating a 1.5% increase[42] - The company reported a gain on the sale of real estate and land amounting to $62,320,000 in Q3 2025, compared to no gain in Q3 2024[54] - The company reported a gain on the sale of real estate and land amounting to $299,524,000 for the nine months ended September 30, 2025[128] Revenue and Occupancy - Same-property revenue and net operating income (NOI) growth were 2.7% and 2.4%, respectively, compared to Q3 2024, with a sequential revenue improvement of 0.7%[9] - Same-property revenue components showed scheduled rents increased by 2.4% year-over-year in Q3 2025[11] - Rental and other property revenues for Q3 2025 were $470,942,000, a 5.8% increase from $448,135,000 in Q3 2024[54] - Total rental and other property revenues for Q3 2025 reached $470.9 million, a 4.8% increase from $448.1 million in Q3 2024[70] - Same-property net operating income (NOI) for Q3 2025 was $285.9 million, compared to $279.3 million in Q3 2024, reflecting a 2.4% year-over-year growth[70] - Financial occupancy rate for Q3 2025 was 96.1%, slightly down from 96.2% in Q3 2024[70] - Total same-property financial occupancy was 96.2% for YTD 2025, slightly down from 96.3% in YTD 2024[76] - The annualized turnover rate increased to 43% in Q3 2025, up from 39% in Q2 2025[70] - Delinquency as a percentage of scheduled rent remained stable at 0.5% for Q3 2025, consistent with Q2 2025[70] Guidance and Projections - Full-year Net Income per diluted share guidance raised by $0.41 to a range of $10.53 to $10.63[9] - Full-year Core FFO per diluted share guidance increased by $0.03 to a range of $15.89 to $15.99, representing 2.2% growth at the midpoint compared to the prior year[9] - For Q4 2025, Core FFO per diluted share guidance is set at $3.93 to $4.03[30] - Total FFO guidance for 2025 is projected to be in the range of $3.20 to $3.30 per share[1] - The guidance for total Net Operating Income (NOI) from consolidated communities for 2025 is projected between $1,314,600,000 and $1,319,200,000, reflecting a same-property NOI growth of 3.4%[94] - Funds from Operations (FFO) for the first nine months of 2025 totaled $802,159,000, with a projected full-year range of $1,060,828,000 to $1,067,428,000[94] - Core Funds from Operations (Core FFO) for the first nine months of 2025 was $797,594,000, with a projected full-year range of $1,059,500,000 to $1,065,800,000[94] - The diluted EPS for 2025 is projected to be between $10.53 and $10.63, with a diluted FFO per share range of $15.91 to $16.01[98] Acquisitions and Dispositions - Acquired one apartment community for $100.0 million and disposed of three communities for a total of $244.7 million in Q3 2025[9] - Total acquisitions for 2025 reached 1,273 apartment homes with a total contract price of $685,875,000, averaging $526 per apartment home[89] - Total dispositions for 2025 amounted to 1,230 apartment homes with a total contract price of $563,805,000, averaging $496 per apartment home[90] - Acquisitions contributed $44.0 million to rental and other property revenues in Q3 2025, up from $17.0 million in Q3 2024[70] Financial Position and Debt - As of September 30, 2025, the company had approximately $1.5 billion in liquidity from available credit facilities, cash, and marketable securities[25] - Total assets increased to $13,150,241 thousand as of September 30, 2025, compared to $12,927,359 thousand at December 31, 2024, reflecting a growth of 1.7%[59] - Total liabilities rose to $7,318,968 thousand, up from $7,176,120 thousand, indicating an increase of 2.0%[59] - Total stockholders' equity reached $5,631,316 thousand, a slight increase from $5,537,046 thousand, representing a growth of 1.7%[59] - The company reported a total debt of $6,661,909 thousand with a weighted average interest rate of 3.7% and a maturity of 6.7 years[60] - The interest coverage ratio stood at 517%, significantly above the required minimum of 150%[65] - The company has a commercial paper program allowing for the issuance of unsecured short-term notes up to $750 million[63] - Total consolidated debt, net as of September 30, 2025, is $6,661,909,000, with net indebtedness totaling $7,472,329,000[125] Operational Insights - The Company has ownership interests in 257 apartment home communities comprising over 62,000 apartment homes, with an additional property in active development[37] - Management anticipates that occupancy rates and rental demand may be adversely affected by competition and local economic conditions[50] - The Company plans to continue its market expansion and development projects to enhance its portfolio and revenue streams[50] - The company reported a blended lease tradeout growth of 2.5% in Q3 2025, compared to 1.6% in Q3 2024[73] - The operating margin for same-property metrics was 69% in Q3 2025, down from 71% in Q2 2025[70] - The company has targeted acquisitions in Northern California, with approximately $636 million in net acquisition activity since 2024, focusing on high-quality submarkets[105] - The company anticipates a financial occupancy rate that reflects actual rental income divided by total scheduled rental income, indicating strong performance in rental management[115] - New lease net effective rate growth and renewal net effective rate growth are key metrics for assessing leasing performance, reflecting the impact of leasing incentives[116]

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Core Insights - Essex Property Trust, Inc. (ESS) is expected to report third-quarter 2025 results on October 29, with anticipated year-over-year growth in revenues and core funds from operations (FFO) per share [1][9] Company Performance - In the last reported quarter, Essex Property achieved a 1.00% surprise in core FFO per share, driven by growth in same-property revenues and net operating income [2] - Over the past four quarters, Essex Property has consistently surpassed the Zacks Consensus Estimate, with an average surprise of 0.89% [2] - For Q3 2025, revenues are projected to increase by 5.51% year-over-year to $475.51 million, with core FFO per share expected to be between $3.89 and $3.99 [9][15] Market Conditions - The U.S. apartment market experienced a slowdown in Q3 2025, with effective asking rents declining by 0.3% from July to September, marking the first rent cut in this period since 2009 [3] - Approximately 637,000 market-rate apartments were absorbed in the year-ending Q3 2025, a decrease from nearly 784,900 units absorbed in the previous quarter [4] - Construction of about 474,800 units was completed nationwide over the past year, with 105,500 units completed in Q3 alone, indicating a competitive environment for landlords [5] Regional Insights - Essex Property is well-positioned due to its significant exposure to the West Coast market, which benefits from higher median household incomes and favorable demographics [8][10] - The company reported superior same-property revenue and core FFO growth compared to peers, largely attributed to strength in Northern California [11] Financial Projections - The consensus estimate for same-property revenues in Q3 is $414.33 million, slightly up from $413.21 million in the previous year [13] - Financial occupancy is projected at 96.4%, reflecting a 20 basis points increase sequentially, while interest expenses are expected to rise by 9.1% year-over-year [14]

Core Insights - Essex Property Trust (NYSE: ESS) is a specialized apartment REIT with a strong focus on California, benefiting from a recovery following pandemic-related challenges [1] - The demand for apartment real estate is expected to rise as the affordability gap continues to widen [1] Company Overview - Essex Property Trust is characterized by its unique concentration in the California market, which positions it favorably in the current real estate landscape [1] - The company is experiencing a sustained recovery, indicating resilience and potential for growth in the apartment sector [1] Market Trends - The widening affordability gap is anticipated to drive increased demand for apartment rentals, suggesting a positive outlook for the sector [1]